EX-99.1 2 g22219exv99w1.htm EX-99.1 exv99w1
Exhibit 99.1
Sonic Automotive, Inc. Reports Fourth Quarter 2009 Earnings
CHARLOTTE, N.C. — February 23, 2010 — Sonic Automotive, Inc. (NYSE: SAH), the nation’s third-largest automotive retailer, today reported that 2009 fourth quarter adjusted earnings from continuing operations were $0.18 per diluted share compared to an adjusted loss from continuing operations of $0.21 per diluted share in the prior year quarter. The adjustments for both periods are detailed further in the attached tables.
Business Overview — Strong operating results and improved capital structure
B. Scott Smith, the Company’s President, said, “The operating initiatives that our stores have been refining over the course of this year continued to drive value for us in the fourth quarter. Vehicle volume for both our new and used business was up nicely as a result of our e-Commerce, advertising and other strategies. Our strong luxury brand mix contributed to our performance as pre-tax profits at our luxury-branded stores were up significantly compared to the prior year quarter. As we progressed through the fourth quarter and the industry-wide new vehicle sales volume rose, we saw dealership profits rise substantially due to our ability to leverage the cost reductions we’ve made throughout the year.”
Mr. Smith continued, “We were pleased to make our announcement in early January that we had completed the refinancing of our syndicated credit facility. That marks the completion of another step we have taken over the course of 2009 and early 2010 to improve our capital structure.”
New Vehicles — Volume and margin both show strong improvements
Commenting on the Company’s new car sales, Mr. Smith noted, “Our new vehicle retail revenue was up approximately 11% compared to the fourth quarter last year as our dealerships continue to gain share in their local markets. In addition, our new vehicle retail margin for the quarter at 7.3% was up 60 basis points compared to the same period last year.”
Used Vehicles — Used vehicle volume and gross profit set Q4 and annual record
Overall used vehicle unit volume was up 18% and total used vehicle revenue was up almost 23% for the fourth quarter of 2009 compared to the same quarter last year. Jeff Dyke, the Company’s EVP of Operations, stated, “The operating playbooks we have been steadily implementing in our used vehicle business continue to drive improvements. This is not just trimming margins to gain volume. We have rolled out a comprehensive strategy that involves getting the right vehicles at the right stores at the right price. When we offer our customers the vehicle they want at a fair price everybody wins — our customers are satisfied and our business grows. The gross profit dollars generated by our used vehicle business in the fourth quarter increased $4.7 million, or 21.1%, compared to the prior year period. This is without considering the incremental F&I and service business we gained with every additional used vehicle we sold.”
Parts and Service — A steady contributor to the bottom line
Sonic’s parts and service revenue for the fourth quarter was flat with the prior year quarter while the gross margin was up 20 basis points at 50.3%. Mr. Dyke stated, “Our parts and service business remains a very profitable and stable piece of our business with the potential for future upside as we continue to roll out our comprehensive operational playbook for this area.”
Scott Smith concluded his comments by noting, “The hard work of our associates and the stability of our business model has been tested and proven once again in the fourth quarter. As a result of many actions taken over the course of this year — expense reductions, strengthening the balance sheet, optimizing cash flow — we believe we

 

 

have set the stage for an even better 2010. We will provide more color on our 2010 outlook on our earnings call later today.”
Presentation materials for the Company’s February 23, 2010 earnings conference call at 11:00 A.M. (Eastern) can be accessed on the Company’s website at www.sonicautomotive.com by clicking on the “For Investors” tab and choosing “Webcasts & Presentations” on the right side of the monitor.
To access the live broadcast of the call over the Internet go to: www.sonicautomotive.com
A live audio of the call will be accessible to the public by calling (877) 791-3416. International callers dial (706) 643-0958. Callers should dial in approximately 10 minutes before the call begins.
A conference call replay will be available one hour following the call for seven days and can be accessed by calling: 800-642-1687, International callers dial (706) 645-9291 Conference ID: 54761428
About Sonic Automotive
Sonic Automotive, Inc., a Fortune 300 company based in Charlotte, N.C., is the nation’s third-largest automotive retailer, operating 145 franchises. Sonic can be reached on the web at www.sonicautomotive.com.
Included herein are forward-looking statements, including statements with respect to future parts and service business potential and general operating performance. There are many factors that affect management’s views about future events and trends of the Company’s business. These factors involve risk and uncertainties that could cause actual results or trends to differ materially from management’s view, including without limitation, economic conditions, risks associated with acquisitions and the risk factors described in the Company’s quarterly report on Form 10-Q for the quarter ending September 30, 2009. The Company does not undertake any obligation to update forward-looking information.

 

 

Sonic Automotive, Inc.
Results of Operations (Unaudited)
(in thousands, except per share, unit data and percentage amounts)
                                                 
    Twelve Months Ended     Twelve Months Ended  
    As Reported             As Adjusted     As Reported             As Adjusted  
    12/31/2009     Adjustments     12/31/2009     12/31/2008     Adjustments     12/31/2008  
 
                                    
Revenues
                                                
New retail vehicles
   $ 3,045,098     $ —     $ 3,045,098     $ 3,738,587     $ —     $ 3,738,587  
Fleet vehicles
     214,988       —       214,988       325,580       —       325,580  
Total new vehicles
     3,260,086       —       3,260,086       4,064,167       —       4,064,167  
Used vehicles
     1,475,395       —       1,475,395       1,368,596       —       1,368,596  
Wholesale vehicles
     150,695       —       150,695       277,559       —       277,559  
 
                                    
Total vehicles
     4,886,176       —       4,886,176       5,710,322       —       5,710,322  
Parts, service and collision repair
     1,088,722       —       1,088,722       1,114,077       —       1,114,077  
Finance, insurance and other
     156,811       —       156,811       183,709       —       183,709  
 
                                    
Total revenues
     6,131,709       —       6,131,709       7,008,108       —       7,008,108  
Total gross profit
     1,044,368       —       1,044,368       1,122,068               1,122,068  
SG&A expenses
     (843,794 )     4,015       (839,779 )     (921,367 )     20,342       (901,025 )
Impairment charges
     (24,514 )     24,514       —       (822,952 )     822,952       —  
Depreciation
     (35,576 )     —       (35,576 )     (33,554 )     —       (33,554 )
 
                                    
Operating income
     140,484       28,529       169,013       (655,805 )     843,294       187,489  
Interest expense, floor plan
     (20,415 )     —       (20,415 )     (44,923 )     —       (44,923 )
Interest expense, other
     (85,586 )     11,992       (73,594 )     (60,276 )     1,174       (59,102 )
Interest expense, non-cash, convertible debt
     (679 )     (11,300 )     (11,979 )     (10,704 )     —       (10,704 )
Interest expense, non-cash, cash flow swaps
     (4,775 )     4,775       —       —       —       —  
Other (expense) / income
     (6,670 )     7,103       433       742       —       742  
 
                                    
Income / (loss) from continuing operations before taxes
     22,359       41,099       63,458       (770,966 )     844,468       73,502  
Income tax (expense) / benefit
     33,251       (61,822 )     (28,571 )     125,399       (147,805 )     (22,406 )
 
                                    
Income / (loss) from continuing operations
     55,610       (20,723 )     34,887       (645,567 )     696,663       51,096  
Income / (Loss) from discontinued operations
     (24,062 )     16,732       (7,330 )     (46,782 )     37,523       (9,259 )
 
                                    
Net income / (loss)
   $ 31,548       (3,991 )   $ 27,557     $ (692,349 )   $ 734,186     $ 41,837  
 
                                    
 
                                                
Diluted:
                                                
Weighted average common shares outstanding
     55,832       —       55,832       40,356       200       40,556  
 
                                                
Earnings / (loss) per share from continuing operations
   $ 1.05     $ (0.37 )   $ 0.68     $ (16.00 )   $ 17.25     $ 1.25  
Earnings / (loss) per share from discontinued operations
     (0.43 )     0.30       (0.13 )     (1.16 )     0.93       (0.23 )
 
                                    
Earnings / (loss) per share
   $ 0.62     $ (0.07 )   $ 0.55     $ (17.16 )   $ 18.18     $ 1.02  
 
                                    
 
                                                
Gross Margin Data (Continuing Operations):
                                                
 
                                                
Retail new vehicles
     7.2 %             7.2 %     7.0 %             7.0 %
Fleet vehicles
     3.5 %             3.5 %     2.6 %             2.6 %
Total new vehicles
     6.9 %             6.9 %     6.6 %             6.6 %
Used vehicles retail
     8.2 %             8.2 %     8.7 %             8.7 %
Total vehicles retail
     7.3 %             7.3 %     7.2 %             7.2 %
Wholesale vehicles
     (4.0 )%             (4.0 )%     (2.5 )%             (2.5 )%
Parts, service and collision repair
     50.3 %             50.3 %     49.9 %             49.9 %
Finance, insurance and other
     100.0 %             100.0 %     100.0 %             100.0 %
Overall gross margin
     17.0 %             17.0 %     16.0 %             16.0 %
 
                                                
SG&A Expenses (Continuing Operations):
                                                
 
                                                
Personnel
   $ 480,106     $ —     $ 480,106     $ 503,122     $ —     $ 503,122  
Advertising
     46,318       —       46,318       58,378       —       58,378  
Facility rent
     141,241       (1,091 )     140,150       142,044       (4,131 )     137,913  
Other
     176,129       (2,924 )     173,205       217,823       (16,211 )     201,612  
 
                                    
Total
   $ 843,794     $ (4,015 )   $ 839,779     $ 921,367     $ (20,342 )   $ 901,025  
 
                                                
SG&A Expenses as % of Gross Profit
     80.7 %     (0.4 )%     80.4 %     82.1 %     (1.8 )%     80.3 %
 
                                                
Operating Margin %
     2.3 %     0.5 %     2.8 %     (9.4 )%     12.0 %     2.7 %
 
                                                
Unit Data (Continuing Operations):
                                                
 
                                                
New retail units
     91,405                       111,675                  
Fleet units
     8,697                       13,430                  
New units
     100,102                       125,105                  
Used units
     77,323                       68,808                  
Total units retailed
     177,425                       193,913                  
Wholesale units
     25,866                       36,674                  
 
                                                
Other Data:
                                                
 
                                                
Same store revenue percentage changes:
                                                
New retail
     (18.6 )%                     (19.7 )%                
Fleet
     (34.0 )%                     (16.9 )%                
Total New Vehicles
     (19.9 )%                     (19.4 )%                
Used
     7.7 %                     (3.0 )%                
Parts, service and collision repair
     (2.4 )%                     (2.1 )%                
Finance, insurance and other
     (14.3 )%                     (11.1 )%                
Total
     (12.6 )%                     (14.5 )%                
 
                                            
                 
    2009     2008  
Description of Adjustments:
                
Continuing Operations:
                
Lease exit and other (hurricane & hail)
   $ 4,015     $ 20,342  
Impairment Charges
     24,514       822,952  
Debt restructuring and other costs
     11,992       1,174  
Derivative mark-to-market gain
     (11,300 )     —  
Ineffectiveness- cash flow swaps
     4,775       —  
Debt restructuring costs
     7,103       —  
Valuation allowance changes and tax effect of adjustments
     (61,822 )     (147,805 )
 
            
Total Continuing Operations
   $ (20,723 )   $ 696,663  
 
            
 
                
Discontinued Operations:
                
Lease exit and other accruals
   $ 27,563     $ 12,750  
Impairment Charges
     5,524       28,393  
Valuation allowance changes and tax effect of adjustments
     (16,355 )     (3,620 )
 
            
Total Continuing Operations
   $ 16,732     $ 37,523  
 
            

 

 

Sonic Automotive, Inc.
Results of Operations (Unaudited)
(in thousands, except per share, unit data and percentage amounts)
                                                 
    Three Months Ended     Three Months Ended  
    As Reported             As Adjusted     As Reported             As Adjusted  
    12/31/2009     Adjustments     12/31/2009     12/31/2008     Adjustments     12/31/2008  
 
                                    
Revenues
                                                
New retail vehicles
   $ 818,344     $ —     $ 818,344     $ 738,483     $ —     $ 738,483  
Fleet vehicles
     50,798       —       50,798       57,286       —       57,286  
Total new vehicles
     869,142       —       869,142       795,769       —       795,769  
Used vehicles
     376,032       —       376,032       306,498       —       306,498  
Wholesale vehicles
     42,711       —       42,711       43,781       —       43,781  
 
                                    
Total vehicles
     1,287,885       —       1,287,885       1,146,048       —       1,146,048  
Parts, service and collision repair
     268,698       —       268,698       268,395       —       268,395  
Finance, insurance and other
     38,610       —       38,610       34,655       —       34,655  
 
                                    
Total revenues
     1,595,193       —       1,595,193       1,449,098       —       1,449,098  
Total gross profit
     259,060       —       259,060       240,613       —       240,613  
SG&A expenses
     (213,280 )     5,165       (208,115 )     (217,993 )     4,191       (213,802 )
Impairment charges
     (18,807 )     18,807       —       (807,896 )     807,896       —  
Depreciation
     (11,188 )     2,536       (8,652 )     (9,497 )     —       (9,497 )
 
                                    
Operating income
     15,785       26,508       42,293       (794,773 )     812,087       17,314  
Interest expense, floor plan
     (5,022 )     —       (5,022 )     (11,143 )     —       (11,143 )
Interest expense, other
     (21,679 )     2,560       (19,119 )     (16,457 )     —       (16,457 )
Interest expense, non-cash, convertible debt
     (2,236 )     —       (2,236 )     (2,713 )     —       (2,713 )
Interest expense, non-cash, cash flow swaps
     (4,775 )     4,775       —       —       —       —  
Other (expense) / income
     (9,189 )     9,198       9       653       —       653  
 
                                    
Income / (loss) from continuing operations before taxes
     (27,116 )     43,041       15,925       (824,433 )     812,087       (12,346 )
Income tax (expense) / benefit
     54,525       (61,107 )     (6,582 )     147,051       (143,207 )     3,844  
 
                                    
Income / (loss) from continuing operations
     27,409       (18,066 )     9,343       (677,382 )     668,880       (8,502 )
Income / (Loss) from discontinued operations
     (13,159 )     10,993       (2,166 )     (9,843 )     8,107       (1,736 )
 
                                    
Net income / (loss)
   $ 14,250     $ (7,073 )   $ 7,177     $ (687,225 )   $ 676,987     $ (10,238 )
 
                                    
 
                                                
Diluted:
                                                
Weighted average common shares outstanding
     65,634       —       65,634       40,087       —       40,087  
 
                                                
Earnings / (loss) per share from continuing operations
   $ 0.45     $ (0.27 )   $ 0.18     $ (16.90 )   $ 16.69     $ (0.21 )
Earnings / (loss) per share from discontinued operations
     (0.20 )     0.16       (0.04 )     (0.24 )     0.19       (0.05 )
 
                                    
Earnings / (loss) per share
   $ 0.25     $ (0.11 )   $ 0.14     $ (17.14 )   $ 16.88     $ (0.26 )
 
                                    
 
                                                
Gross Margin Data (Continuing Operations):
                                                
 
                                                
Retail new vehicles
     7.3 %             7.3 %     6.7 %             6.7 %
Fleet vehicles
     3.1 %             3.1 %     3.9 %             3.9 %
Total new vehicles
     7.0 %             7.0 %     6.5 %             6.5 %
Used vehicles retail
     7.2 %             7.2 %     7.3 %             7.3 %
Total vehicles retail
     7.1 %             7.1 %     6.7 %             6.7 %
Wholesale vehicles
     (6.8 )%             (6.8 )%     (6.6 )%             (6.6 )%
Parts, service and collision repair
     50.3 %             50.3 %     50.1 %             50.1 %
Finance, insurance and other
     100.0 %             100.0 %     100.0 %             100.0 %
Overall gross margin
     16.2 %             16.2 %     16.6 %             16.6 %
 
                                                
SG&A Expenses (Continuing Operations):
                                                
 
                                                
Personnel
   $ 118,693     $ —     $ 118,693     $ 110,850     $ —     $ 110,850  
Advertising
     12,206       —       12,206       11,910       —       11,910  
Facility rent
     35,530       (1,091 )     34,439       35,184       (291 )     34,893  
Other
     46,851       (4,074 )     42,777       60,049       (3,900 )     56,149  
 
                                    
Total
   $ 213,280     $ (5,165 )   $ 208,115     $ 217,993     $ (4,191 )   $ 213,802  
 
                                                
SG&A Expenses as % of Gross Profit
     82.3 %     (2.0 )%     80.3 %     90.6 %     (1.7 )%     88.9 %
 
                                                
Operating Margin %
     1.0 %     1.7 %     2.7 %     (54.8 )%     56.0 %     1.2 %
 
                                                
Unit Data (Continuing Operations):
                                                
 
                                                
New retail units
     23,007                       21,643                  
Fleet units
     1,895                       2,382                  
New units
     24,902                       24,025                  
Used units
     18,711                       15,817                  
Total units retailed
     43,613                       39,842                  
Wholesale units
     6,868                       6,798                  
 
                                                
Other Data:
                                                
 
                                                
Same store revenue percentage changes:
                                                
New retail
     10.8 %                     (36.0 )%                
Fleet
     (11.3 )%                     (35.3 )%                
Total New Vehicles
     9.2 %                     (36.0 )%                
Used
     22.7 %                     (14.5 )%                
Parts, service and collision repair
     0.1 %                     (5.1 )%                
Finance, insurance and other
     11.8 %                     (32.3 )%                
Total
     10.1 %                     (28.4 )%                
 
                                            
                 
    2009     2008  
Description of Adjustments:
                
Continuing Operations:
                
Lease exit and other (hurricane & hail)
   $ 5,165     $ 4,191  
Impairment Charges
     18,807       807,896  
Depreciation adjustments
     2,536       —  
Debt restructuring and other costs
     2,560       —  
Ineffectiveness- cash flow swaps
     4,775       —  
Debt restructuring costs
     9,198       —  
Valuation allowance changes and tax effect of adjustments
     (61,107 )     (143,207 )
 
            
Total Continuing Operations
   $ (18,066 )   $ 668,880  
 
            
 
                
Discontinued Operations:
                
Lease exit and other accruals
   $ 23,213     $ 1,305  
Impairment Charges
     2,116       2,038  
Valuation allowance changes and tax effect of adjustments
     (14,336 )     4,764  
 
            
Total Continuing Operations
   $ 10,993     $ 8,107